24 CFR 203.558 - Handling prepayments.

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§ 203.558 Handling prepayments.

(a)Handling prepayments for FHA-insured mortgages closed on or after January 21, 2015. With respect to FHA-insured mortgages closed on or after January 21, 2015, notwithstanding the terms of the mortgage, the mortgagee shall accept a prepayment at any time and in any amount. The mortgagee shall not require 30 days' advance notice of prepayment, even if the mortgage instrument purports to require such notice. Monthly interest on the debt must be calculated on the actual unpaid principal balance of the loan as of the date the prepayment is received, and not as of the next installment due date.

(b)Handling prepayments for FHA-insured mortgages closed before January 21, 2015.

(1) With respect to FHA mortgages insured before August 2, 1985, if a prepayment is offered on other than an installment due date, the mortgagee may refuse to accept the prepayment until the first day of the month following expiration of the 30-day notice period as provided in the mortgage, or may require payment of interest to that date, but only if the mortgagee so advises the mortgagor, in a form approved by the Commissioner, in response to the mortgagor's inquiry, request for payoff figures, or tender of prepayment. If the installment due date (the first day of the month) falls on a nonbusiness day, the mortgagor's notice of intention to prepay or the prepayment shall be timely if received on the next business day.

(2) With respect to FHA mortgages insured on or after August 2, 1985, but closed before January 21, 2015, the mortgagee shall not require 30 days' advance notice of prepayment, even if the mortgage instrument purports to require such notice. If the prepayment is offered on other than an installment due date, the mortgagee may refuse to accept the prepayment until the next installment due date (the first day of the month), or may require payment of interest to that date, but only if the mortgagee so advises the mortgagor, in a form approved by the Commissioner, in response to the mortgagor's inquiry, request for payoff figures, or tender of prepayment.

(3) If the mortgagee fails to meet the full disclosure requirements of paragraphs (b)(1) and (b)(2) of this section, the mortgagee may be subject to forfeiture of that portion of the interest collected for the period beyond the date that prepayment in full was received and to such other actions as are provided in part 25 of this title.

(c)Mortgagee annual notice to mortgagors. Each mortgagee, with respect to a mortgage under this part, shall provide to each of its mortgagors not less frequently than annually a written notice, in a form approved by the Commissioner, containing a statement of the amount outstanding for prepayment of the principal amount of the mortgage. With respect to FHA-insured mortgages closed before January 21, 2015, the notice shall describe any requirements the mortgagor must fulfill to prevent the accrual of any interest on the principal amount after the date of any prepayment. This paragraph shall apply to any outstanding mortgage insured on or after August 22, 1991.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, HUD, Office of the Assistant Secretary for Housing—Federal Housing Commissioner

Proposed rule.

Comment due date: November 28, 2016.

24 CFR Parts 203 and 234

Summary

This proposed rule would implement HUD's authority under the single-family mortgage insurance provisions of the National Housing Act to insure one-family units in a multifamily project, including a project in which the dwelling units are attached, or are manufactured housing units, semi-detached, or detached, and an undivided interest in the common areas and facilities which serve the project. The rule would codify requirements for Direct Endorsement lenders to meet in order to be approved for the Direct Endorsement Lender Review and Approval Process (DELRAP) authority for condominiums, and basic standards that projects must meet to be approved as condominiums in which individual units would be eligible for mortgage insurance, as well as particular cases such as Single-Unit Approvals and site condominiums. The rule provides a method by which certain approval standards could be varied efficiently to meet market needs while providing for public comment where appropriate. Currently, single-family condominium project approval is provided under HUD's Condominium Project Approval and Processing Guide and related Mortgagee Letters. Condominiums under this rule are distinct from condominiums in which the project has a blanket mortgage insured by HUD.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, HUD, Office of the Assistant Secretary for Housing—Federal Housing Commissioner

Partial withdrawal of proposed rule.

As of October 16, 2015, HUD withdraws the proposed additions of §§ 203.317a and 203.372, and proposed revision to § 203.318, published Monday, July 6, 2015 (80 FR 38410).

24 CFR Part 203

Summary

This document withdraws part of a proposed rule, published in the Federal Register on July 6, 2015, that proposed to establish a maximum time period within which an FHA-approved mortgagee must file a claim with FHA for insurance benefits, and to revise HUD's policies concerning the curtailment of interest and the disallowance of certain expenses incurred by a mortgagee as a result of the mortgagee's failure to timely initiate foreclosure or timely take such other action that is a prerequisite to submission of a claim for insurance. This withdrawal covers only the portion of the proposed rule that would have established the maximum time period within which an FHA-approved mortgagee must file a claim with FHA for insurance benefits.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, HUD, Office of the General Counsel

Interpretive rule.

Effective Date: October 15, 2015.

24 CFR Part 203

Summary

The Federal Housing Administration (FHA) generally acquires title to single family properties when it pays mortgage insurance benefits to approved mortgagees. FHA's activities in managing and marketing the properties it acquires include paying real estate taxes referred to as ad valorem taxes (a tax based on the value of the property) and special assessments. For properties in condominiums or planned unit developments, FHA also pays homeowners' association or condominium association fees. During the period over which an insured lender forecloses and FHA becomes the owner of the property, taxes or other fees may become due and payable. With lenders conveying close to 100,000 properties annually to FHA, bills for taxes and fees may be past due and payable at the time of FHA's acquisition and suits are brought for payment of taxes and fees. This rule provides HUD's interpretation of the “sue and be sued” clause contained in section 1, Title I of the National Housing Act. This rule provides that, in the case of an action brought against HUD to foreclose on a lien arising out of unpaid taxes or fees, the term “court of competent jurisdiction” as used in section 1 of the National Housing Act refers to a United States District Court. In conjunction with this interpretive rule, HUD is providing, by separate notices published in today's Federal Register, direction to taxing authorities and other entities owed money as to the proper Point of Contact (POC) at HUD for seeking payment. In the unlikely event that payment is not timely made, the entity can bring an action under the Quiet Title Act in the appropriate United States District Court to foreclose on its lien interest in the property.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, HUD, Office of the Assistant Secretary for Housing-Federal Housing Commissioner

Final rule.

Effective Date: September 24, 2015.

24 CFR Parts 203, 207, 220, 221, 232, 236 and 241

Summary

This final rule is a cost-savings measure to update HUD's regulations regarding the payment of FHA insurance claims in debentures. Section 520(a) of the National Housing Act grants the Secretary discretion to pay insurance claims in cash or debentures. Although some sections of HUD's regulations have provided mortgagees the option to elect payment of FHA insurance claims in debentures, HUD has not paid an FHA insurance claim in debentures under these regulations in approximately 5 years. This final rule amends applicable FHA regulations to bring consistency in determining the method of payment for FHA insurance claims. This final rule follows publication of the February 20, 2015, proposed rule and adopts the proposed rule without change.